Uh, duh?

blockbuster VIP maiboxYou needed a media conference to figure out that people are fleeing broadcast and cable TV because they don’t like to watch ads?

This New York Times story, chronicling the latest wailing and gnashing of teeth over streaming by TV executives who should have known better, says:

“Is Netflix a friend or an enemy to traditional television?

On one hand, the streaming service has added billions of new dollars into the television business in recent years, building up its offerings by licensing programs from TV groups. But as Netflix increases its total number of subscribers, some analysts and industry executives are starting to voice a concern — that a steady rise in streaming is fueling the deterioration of traditional TV audiences and related ad revenues.”

When a Netflix executive says that Netflix is “absolutely complementary” to your media distribution business, as Reed Hastings said about Blockbuster in 2007 and Ted Sarandos said about cable in 2011, it means you are already toast. You missed the boat. Done. The gates are closed and Trojan horse is inside.

Instead of palavering this for another four years, TV executives, why not fix it with more innovative thinking like this?


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Streaming TV: A portal to the next big thing in film

screenshotI got to playing with my AppleTV last weekend after a long-delayed software update and spent an embarrassing amount of time on Vimeo, a curated channel for indie filmmakers. Streaming TV is giving audiences access to amazing and innovative content — in the same way that Netflix and Blockbuster Online brought the independent film movement mainstream. This little animated short was one of my favorites: http://vimeo.com/82542938

Here’s a list of the main streaming services and how they work.


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Netflix in China: Cultural Divide?

Hmmm. Two interesting points in the second half of this Huffington Post article — linking the fact that Mark Cuban last month upped his stake in Netflix with the idea that it is a ripe takeover target for Chinese e-commerce giant Alibaba.

Reports are circulating that Alibaba is eyeing a stake in Lionsgate, a studio with a large film and TV library that includes the “Hunger Games” and “Twilight” films. So for a moment, we’ll go with the notion that Alibaba could be interested in Netflix.

In my book, I detailed the on-again, off-again talks that Reed Hastings and Jeff Bezos have had over the years exploring partnerships, cross promotions, and yes, a merger, between their two companies.

It looked like a great fit: Netflix wanted access to Amazon’s huge customer base, and Amazon wanted to hedge cooling DVD sales with hot online rental. The two CEOs could never agree on financial terms, and ultimately, tax issues related to Netflix’s DVD distribution centers may have derailed a merger.

Yet it seemed culturally dissonant to wedge a software/entertainment company like Netflix into a retailer — like selling bacon at a bicycle shop.

Now comes the Chinese version of Amazon, apparently looking for a way to jump-start the incredibly complicated and costly process of setting up an online streaming service from scratch.

Netflix is looking to expand internationally to offset cooling domestic growth, and China, Hastings once told me, is one of his dream markets. A corporate marriage between these two seems auspicious, yet China, with its strict censorship, seems antithetical to what Netflix is all about: the content you want, when and where you want it. Bacon, bicycle.

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‘Grey market’ Netflix subscribers show love globally

PocketbookWell, this is interesting. Netflix already has a sizable and fast-growing subscriber base in Australia, even though the streaming service is not set to launch there until early next year, according to this graphic from the personal finance site Pocketbook.

I have seen lots of online postings about apps and techniques for getting around geoblocking in countries that don’t offer Netflix. That makes me wonder what the company’s global “grey market” subscription base is, and whether those streaming-starved subscribers determined which international markets Netflix chose for its big 2015 expansion.

This article in the Sydney Morning Herald also shows that the global value of streaming is expected to rise by nearly 50 percent over the next four years — to $10 billion — thanks to “streamcasters” like Netflix, Hulu Plus, and Amazon. That figure seems suspect to me, as Netflix 2014 revenue on streaming alone is expected to be $4.7 billion. With HBO and cable sports getting ready to hop on internet TV subscription, that’s gotta be too low.

Read more: http://www.smh.com.au/entertainment/tv-and-radio/netflix-hulu-plus-amazon-to-double-value-of-global-streaming-by-2018-20141121-11r19o.html#ixzz3KgfTHbXO



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Can Amazon and Netflix peacefully co-exist?

NetflixappI don’t really agree with the premise that Amazon Instant Video is within striking distance of Netflix, not just because the two services are still so far apart by the only measure that counts — hours streamed — but because consumers use the two so differently.

Yes, you can binge-watch TV shows on Amazon Instant Video — I watched almost an entire season of Rome last weekend while nursing a cold. But the hybrid subscription/pay-per-view Amazon Prime model inhibits you from surfing the catalog and sampling content in a way that racks up significant viewing hours or consumer attachment.

In my mind, consumers turn to Amazon — and to Apple’s iTunes for that matter — when they want to watch a specific movie or TV show, sort of how we used to go to Blockbuster (and now Redbox) for newly released titles. We use Netflix to find something to watch, the way we used to channel surf.

This is what Reed Hastings calls “different use occasions” that make up the spectrum of the home entertainment market. Hastings used this concept to dismiss speculation that Apple would kill Netflix when iTunes began selling movies and TV shows. It sounded like wishful thinking at the time but — he was right.

Anyway, this Motley Fool note contains a lot of interesting stats about streaming that remind me of the adoption curve for online DVD rental:


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Obama sides with Netflix on net neutrality

Happy Monday to Netflix and other streaming channels, subscribers of said, and bloggers everywhere on what could be a big win in its ongoing war over net neutrality. President Obama here signals his disapproval of the FCC proposal to create fast and slow “lanes” for Internet traffic. Here’s the alert and link from the New York Times: http://nyti.ms/1EuTgO2



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The Human Side of Netflix’s Matching Algorithm

TV Remote ControlI have written a lot about Netflix’s matching algorithm, dubbed “Cinematch” by the founding team. I did not know the company still uses humans to tag and rate aspects of movies and TV shows. It’s kind of amazing that they have figured out how to make human-generated ratings consistent enough to incorporate into the movie matching system. The original algorithm groups viewers into “neighborhoods” to share movies among people of similar tastes. I would definitely love to have this job!


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If Hastings is the Web’s Louis B Mayer, does that make Ted Sarandos its Cecil B DeMille?

I get asked a lot lately whether I think Netflix is going to become a major player in creating original series – the underlying question, of course, is whether CEO Reed Hastings and content chief Ted Sarandos are gunning for the Hollywood studios’ breadbaskets – their production business.

Ted Sarandos' profile is rising, along with Netflix's, in Hollywood.

Netflix Chief Content Officer Ted Sarandos’ profile rises in Hollywood, as the company takes on a new role.

This speculation seems perfectly natural, especially after an impressive and historic showing at the Emmy Awards of Netflix’s new shows. Nearly every Netflix-made series — House of Cards, Arrested Development and Hemlock Grove – was nominated and the one that wasn’t recognized by the Emmys – Orange Is the New Black – is dominating both water cooler and industry talk and Netflix streams.

Sure, Netflix could give the studios a run for their money. Hastings and Sarandos are already doing that using the same approach that gave them unrivaled hegemony over online rental and streaming – using an enormous amount of predictive data gathered from closely studying consumers for 16 years and delivering what people actually watch – not what the studio system bell jar thinks Flyover Land consumers will like.

And yes, Netflix will continue to be very successful – but making content is not their core mission, or their core competency really. Attracting and retaining subscribers is. Right now, Netflix is using content creation as a strong magnet to achieve that core mission, but it is extremely risky.

So my thought is that if Hastings and Sarandos can hive off that risk on somebody else – like the people whose job it is (ahem, studios) – and get a good profit-sharing deal for providing data and distribution (as well as their famously hands-off, artist-centric attitude toward production) — everybody wins.


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